Feb. 7 (Bloomberg) -- Creditors led by Pacific Investment Management Co. agreed to terms for about $200 million of financing for Eike Batista’s oil company that will strip control from the former billionaire, said two people with knowledge of the talks.
The arrangement with Oleo & Gas Participacoes SA bondholders will be signed as soon as today, the people said, asking not to be identified before the deal is made public. Deutsche Bank AG will act as an intermediary in the transaction, said one of the people.
The press department at OGP, formerly OGX, declined to comment when contacted by telephone in Rio de Janeiro. Pimco and Deutsche Bank press officials didn’t immediately comment when contacted by phone.
The accord would end more than six weeks of talks to finalize a preliminary debt-for-equity swap announced on Dec. 24 that will give creditors control of the explorer founded by Batista. The DIP financing will help cover costs at its only producing oil field as the company looks to emerge from bankruptcy protection after triggering Latin America’s largest corporate default last year.
The financing forms part of a restructuring plan that OGP needs to deliver to a court in Rio. The company has until Feb. 17 to present the plan, Caetano Berenguer, a partner at law firm Sergio Bermudes that represents OGP, said in a telephone interview today.
The judge evaluating the case probably will approve the plan if it means preventing the company from running out of cash, said Renee Dailey, a partner at Bracewell & Giuliani LLP in Hartford, CT.
“There’s a preference for restructuring, meaning there is a preference in keeping businesses running and people working,” she said in a telephone interview yesterday. “If this does that, that’s a compelling reason for the court to approve it.”
OGP surged in value in 2009 and 2010 after reporting discoveries at more than 80 percent of wells drilled, allowing Batista to tap debt markets to finance operations. Shares of OGP Have slumped 98 percent since the company started output in January 2012.
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